Financial Risk Management
Gauging the Effect of Select Macroeconomic Variables on BSE 100 and Nifty 50

Article Details
Pub. Date : Mar, 2022
Product Name : The IUP Journal of Financial Risk Management
Product Type : Article
Product Code : IJFRM020322
Author Name : Seema Rathee* and Deepanshi Aggarwal**
Availability : YES
Subject/Domain : Finance Management
Download Format : PDF Format
No. of Pages : 9



The stock market has now become a vital and inseparable part of the economy. It is a touchstone that helps in gauging the nation's economic health. As macro variables play a significant role, this study contemplates their impact on stock market prices of both BSE 100 and Nifty 50. The research relies solely on secondary information. Pearson correlation coefficient and multiple regression were applied to evaluate the data for the period 2011 to 2020. The study considers GDP as the dominant independent variable of both BSE 100 and Nifty 50 with R2 values of 85.1% and 83.6%, respectively. However, the GDP is an important factor for both the dependent variables; nevertheless, its influence on BSE 100 has been more than Nifty 50, and the combined impact of both independent variables exposed more influence on NSE (R2 = 96.5%) than BSE 100. In addition to this, the results show that if both the independent variables are kept constant there are further elements that impact BSE 100 and Nifty 50.


The stock market constitutes a substantial fragment of a nation's financial sector. A well-organized capital market fuels economic growth by bringing together a plethora of funds indispensable for the country's economic progress. Stock values alter rapidly in a well-organized market in response to fresh figures. Stock values represent all accessible financial statements as well as predictions for the company's performance. Accordingly, stock values must be regarded as a key indicator for activities in the economy if they represent these assumptions in the actual (Ray, 2012). Hence, the vibrant relation between macroeconomic variables and stock prices holds educational interest along with policy implications.

The capital market of India has undergone many fundamental modifications since 1991, owing to the effects of economic reforms. Consequently, the stock market has seen notable development. Furthermore, the share markets in emergent nations, such as India, are expected to be subtle to elements such as ups and downs in economic activities, deviations in the governmental and global policies, and alterations in macroeconomic variables (Naik and Padhi, 2012).